Cohen is said to sell art as legal bills mount

New York Times

New York Times News Service

Updated 8:39 pm, Monday, October 14, 2013

Steven "Steve" Cohen, chairman and CEO of SAC Captial Advisors, is selling some of his prized art to help pay for legal bills after his hedge fund was indicted on insider-trading related charges.
Photo: Simon Dawson, Simon Dawson/Bloomberg

In recent months, as his legal troubles have deepened, the billionaire hedge-fund manager Steven A. Cohen has sold stocks to meet withdrawal requests from skittish investors.

Now, in addition to stocks, Cohen, a Greenwich resident, is selling significant works of art from his celebrated collection.

Cohen has put two major paintings by Andy Warhol and an abstract canvas by Gerhard Richter up for sale, according to art experts familiar with his holdings who requested anonymity because they were not authorized to speak publicly. Sotheby's will auction the works at next month's contemporary art auction in New York.

Cohen has hundreds of works in his prodigious collection and, in keeping with his trader's mentality, buys and sells them with frequency. Owners of fine art also often sell art for tax reasons, as they can defer their tax liability by exchanging one piece for another. Still, the dispositions come as Cohen faces mounting legal bills and record penalties that he might be forced to pay as part of a settlement related to criminal insider trading charges brought against his fund, SAC Capital Advisors of Stamford.

The government has offered the fund a deal to resolve the case by pleading guilty and paying a penalty of nearly $2 billion. Cohen's lawyers are in the midst of negotiating a possible plea deal with prosecutors, though the two sides have yet to reach an agreement.

Because Cohen owns 100 percent of his firm, any fine paid by SAC would effectively come out of Cohen's pocket. SAC has already agreed to pay $616 million to settle two civil insider-trading actions brought by the Securities and Exchange Commission.

Steinberg's trial is scheduled for Nov. 18; the government has accused him of illegal trading in the technology stocks Dell and Nvidia. In January, prosecutors will try Martoma on charges that he obtained secret results of drug trials and helped SAC generate gains and avoid losses of $276 million by trading on that information.

Steinberg and Martoma are two of 11 former SAC employees who have been tied to insider trading while at the hedge fund; six of them have pleaded guilty to criminal charges.

In July, Preet Bharara, the U.S. attorney in Manhattan, cited the large number of guilty pleas by former SAC employees when he announced the firm's indictment of SAC.